Four retired school employees sue NM retirement board

They claim constitutional right to cost-of-living increase

SANTA FE >> Do retired school employees in New Mexico have a constitutional right to cost-of-living increases in their pensions?

State legislators and Gov. Susana Martinez say no. But four retirees who are suing the New Mexico Educational Retirement Board contend that cost-of-living adjustments are "vested property rights" that cannot be reduced.

The state Supreme Court will hear arguments in the case Sept. 4. Then the court will decide whether a law approved this year to reduce cost-of-living payments will stand.

State Rep. Dennis Roch, himself a school administrator, said he believed the Legislature was on solid footing when it overwhelmingly voted to reduce cost-of-living adjustments to school retirees' pensions.

The bill cleared the Senate 41-0 and the House of Representatives 54-13. Martinez signed it into law in March.

"If I had to predict, I would say the law will be ruled constitutional," said Roch, R-Texico. "We didn't change the base in pension payments, only the cost-of-living adjustments. And we did that as one of the steps to keep the system solvent."

Public school and university retirees who are suing claim that cost-of-living increases amount to a property right that is constitutionally protected from cutbacks.

The four, who range in age from 71 to 94, also say cutting cost-of-living increases will create hardships for retirees, who are bound to have more medical bills as they age.

Advertisement

"The Educational Retirement Board intends to apply COLA reductions to retirees who have acquired vested property rights," the four said in their lawsuit challenging the new law.

They say a cost-of-living statute that was in effect when they retired established ground rules for higher pensions as prices rose.

One of the retirees suing the board is Beth Lehman, 71, who retired from the University of New Mexico with less than 25 years of service.

Her lawyers wrote in a brief to the Supreme Court that her pension from the Educational Retirement Board is about $15,000 a year. They project that the new law will cut her cost-of-living increases by 20 percent, a critical change to someone in her circumstance of fragile health.

According to her lawsuit, Lehman was hospitalized with West Nile virus meningoencephalitis in 2004 and took catastrophic leave from her job the following year.

"She expects to draw down her assets to survive financially," her lawyers said in their brief.

Another of those suing is David Hamilton, 94. He retired from UNM in 1988 after 38 years at the school. Legally blind, Hamilton said the gross income from his retirement board pension was about $50,000 a year in 2011.

Legislators and the governor decided to change parts of public pension programs to save them from collapsing, Roch said.

Before lawmakers acted this year, the Educational Retirement Board projected that it was facing a deficit of almost $6 billion in the long term.

Another system for government workers, the Public Employee Retirement Association, anticipated an even bigger gap between assets and expenses unless costs were cut.

Legislators made changes to both pension programs in hopes of keeping them solvent, Roch said.

"A constitutional provision allows some modification to the system. What we did was for the long-term health of the fund," he said.

Roch said he disagreed with the premise of the school retirees' lawsuit.

"I don't view cost-of-living adjustments as a right. When we have received something, come to expect something, and then it's cut back, of course people are disappointed," he said.

More than 60,000 employees and 37,000 retires are included in the educational pension program. It covers everyone from teachers to school janitors to college professors.

The retirement board is being represented in the lawsuit by its own legal team and the state attorney general's staff.

Milan Simonich, Santa Fe Bureau chief of Texas-New Mexico Newspapers, can be reached at 505-820-6898. His blog is at nmcapitolreport.com.